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Claiming a Seat at the Table: Five Key Steps to Help Women Retire with Confidence

March 06, 2024

By Abby Reed and April Reed Crews

Women are breaking barriers and becoming more involved in finances, with almost 40% of women being the head financial decision-makers in their households. More wealth is being controlled by women every day, and by 2030, it’s estimated that women will control $30 trillion in financial assets.

As female advisors, we are excited about the progress women have made in the financial world, and we also acknowledge the work that still needs to be done to help women thrive financially. Historically, women have been underserved when it comes to financial management, but our goal is to empower women to take control of their futures and be confident in the unique strengths they have.

Preparing for retirement can feel daunting, especially for women who face several unique challenges. Thankfully, women can overcome those challenges with proactive planning and strategy.

  1. Strategize Social Security

The gender pay gap not only affects women’s ability to earn adequate income during their working years, but it can also impact their Social Security benefits, which are determined by a person's 35 highest earning years. Plus, the majority of caretakers are women. A reduction of working hours or leaving the workforce entirely to take care of children or aging parents can further reduce your Social Security benefits.

If you don’t have enough Social Security credits on your own, or if your benefits are not equal to at least half of your spouse’s, you can take advantage of spousal benefits. This allows you to receive up to half of your spouse’s full Social Security benefit amount when you reach full retirement age.

If you lose your spouse through death or divorce, there are still ways to maximize your Social Security benefits. If your ex-spouse's benefits are higher than your own, you can still receive the same benefit amount as long as certain criteria have been met. If you have the higher benefit amount and your ex-spouse decides to use spousal benefits, your benefit amount will not be affected.

If your spouse passes, it can be difficult to live off of only one Social Security payment per month. However, survivorship benefits allow you to keep whichever benefit amount is higher. Keep in mind that some government pensions can interfere with this, such as the windfall provision for teachers in Gwinnett County.

Working longer can potentially make a big difference in your monthly benefit amount, as well. It’s important to understand all of your options and make a proactive strategy to get the most out of your Social Security benefits.

  1. Maximize Retirement Savings

Being paid less than their male counterparts means many women have less money to save for the future and women who choose to stay home as caretakers don’t have access to employer-sponsored 401(k) accounts.

Opening a spousal IRA can help! If you and your spouse file taxes jointly and meet the income required for IRAs, you can open a traditional IRA or Roth IRA. The working spouse can save money in the account, up to the annual maximum contribution limit.

Consider opening a Roth IRA to save more tax-free income for retirement. Taxes are likely to increase in the near future, and women often face the widow’s penalty in retirement. This happens when the surviving spouse has to file as an individual, which lowers the thresholds for the income tax brackets. Saving money in both pre-tax and post-tax accounts can help avoid a large tax bill down the road and can also help create a more tax-efficient legacy plan.

Retirement accounts are not the only way to build your wealth. Consider opening an individual or joint investment account, which can be accessed before retirement age, offering more flexibility in case you need to use the money for an emergency or early retirement.

  1. Consider Long-Term Care Insurance

One in five adults will need long-term care at some point, but very few plan for how they’ll pay for their healthcare expenses. On average, women live almost six years longer than men, which puts them at a greater risk of having long-term care needs as they age.

Medicare and traditional health care policies do not cover most long-term care costs, but many people are skeptical of buying a traditional long-term care insurance policy for fear of not having enough coverage or losing money if the policy goes unused. Our grandmother, who lived into her 90s, experienced this when her long-term care insurance policy cost skyrocketed, made qualification for benefits difficult, and didn’t fully cover her needs.

Witnessing her struggles firsthand inspired us to look for alternative solutions that don’t have a “use it or lose it” feature. There are several new options for long-term care coverage that are both flexible and more affordable, such as an annuity with a long-term care rider. We recommend meeting with a financial professional who can help assess your specific needs and weigh the pros and cons of different coverage options alongside you.

  1. Increase Financial Knowledge

When we first meet with couples, there is often one dominant partner who knows everything about their financial situation and another who largely defers financial decision-making. Traditionally, this was the woman in the relationship, but that dynamic is starting to change. A spouse who has been uninvolved in financial decisions can experience undue stress and difficulty if they are suddenly thrust into managing their finances on their own after a death or divorce.

At Reed Financial Group, our advisors encourage and facilitate open communication about finances, investing, and retirement planning with women–even when they haven’t historically been involved. We want to equip and empower women with the confidence and education needed to make sound financial decisions.

If you’re not sure where to start, we recommend finding a podcast or YouTube channel hosted by someone you can connect with and relate to. Set a reasonable goal, such as listening to one episode or reading one article every week. Those small habits will snowball and help you develop a regular routine. We have a YouTube page full of helpful resources if you want to improve your financial literacy.

  1. Embrace Your Strengths and Create a Plan

For all of the strides women have made in recent years, there is still a confidence gap when it comes to making big decisions like planning for retirement and investing for the future. Past negative experiences with the typically male-dominated financial industry and cultural norms can easily undermine a woman’s confidence.

For example, many women feel intimidated by investing and, as a result, tend to keep more money on the sidelines compared to their male counterparts who invest regularly. But 65% of women say they would be more likely to invest if they had a clear plan of action. A financial advisor can provide the support many women want by creating a holistic financial plan and investment strategy designed to meet their specific needs. Being willing to seek out advice and accept help from a financial professional will only help you reach your goals faster.

We encourage our female clients to lean into their natural strengths for financial planning. Whether it’s their attention to detail, creative thinking skills, or ability to collaborate well, women have a unique skill set that translates well to making wise financial decisions.

One of our best strengths as women is our ability to think carefully before acting. While some may see risk aversion as a weakness when it comes to investments, it can be a major strength to help protect your hard-earned money and avoid unnecessary risk. The key is to find safer investments that grow your money, while also providing protection. It’s important to avoid having too much “lazy money” sitting on the sidelines.

As women increasingly control more of the world’s wealth and make more financial decisions for both themselves and their families, it’s important for them to take charge of their financial future now. Partnering with a trusted professional and creating a proactive plan can help women save, invest, and reach retirement successfully and confidently.

If you want to learn more about retirement planning, reach out! As female retirement specialists, we are uniquely positioned to connect with the women who come into our office. We enjoy educating our clients and providing tools to guide them toward making financial decisions with full confidence.